Senators Tom Harkin of Iowa and Richard Lugar of Indiana have introduced legislation aimed at addressing one of the valid criticisms of ethanol production — the lack of an economical way to move the renewable fuel to major markets.
The legislation authored by Harkin, chairman of the Senate Agriculture Committee, and Lugar, ranking member on the Foreign Affairs Committee, would give pipeline owners the same tax benefits they receive for moving petroleum products for transferring ethanol to other parts of the country.
“While the Midwest and Plain states produce the most renewable fuels, the country is lacking the infrastructure to most efficiently transport these liquid fuels to population centers in the East and elsewhere,” the senators said in a press release. Most ethanol has to be shipped by truck or rail.
“While the most efficient mode for transporting liquid biofuels is by pipeline, a provision in the tax code is effectively blocking Publicly Traded Partnerships — that build and operate most liquid pipelines — from moving forward,” they said.
Under current law, those publicly traded partnerships are required to earn 90 percent of their income from the exploration, transportation, storage, or marketing of depletable natural resources, including oil, gas, and coal, but not renewable fuels.
The Harkin-Lugar bill would change the tax code to state that PTPs can earn “qualified” income from the transport, storage, or marketing of any renewable liquid fuel approved by the Environmental Protection Agency.
“We must seize control of our energy future and shift rapidly and robustly to clean, home-grown sources of energy, including ethanol and other renewable fuels,” said Harkin.
“Our bill makes a simple change to the tax code that meets the demands and realities of the 21st century energy marketplace, removing barriers so that biofuels producers in the Midwest and elsewhere will have an efficient, inexpensive way to transport these renewable fuels to the market. And it will continue to provide relief to consumers getting hit hard with rising fuel costs.”
“We must explore every option for reducing our dependence on foreign oil,” said Lugar, a former chairman of the ag committee. “Overcoming problems in moving ethanol through pipelines, as Brazil has done, is important in developing the full promise of America’s renewable fuels.”
Harkin and Lugar have worked together on several efforts to boost ethanol transport by pipeline. In March 2007, the two introduced The Ethanol Infrastructure Expansion Act of 2007, directing the Department of Energy to conduct a feasibility study on transporting ethanol by pipeline. The measure was included in the energy bill that became law in December 2007.
An expanded version of that measure was also included in the 2008 farm bill, the Food Conservation and Energy Act, which became law May 22.